Archive for Saturday, September 30, 2000

Co-op to reopen Monday

Judge says sales may resume, but other assets stay frozen

September 30, 2000

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A federal bankruptcy judge Friday granted a fresh start to a Lawrence-based agricultural cooperative, but the troubled organization's past won't be so quickly forgotten.

The Farmers Cooperative Assn. will reopen Monday with the consent of U.S. Bankruptcy Judge John Flannagan, who ruled that the co-op once again could buy and sell grain and other agricultural products and services.

But any debts outstanding prior to Wednesday's bankruptcy filing debts that could total as much as $50 million will remain frozen, pending approval of a Chapter 11 reorganization plan.

"From Monday morning forward, it's a normal course of operations," said Don Dumler, the co-op's president and chief executive officer. "It'll be just as we were before the bank pulled the plug."

That means the co-op's more than 3,500 farmer owners will be able to drop loads of grain for sale at the organization's elevators in northeast Kansas.

Grain already held in open storage also may be sold. Besides Lawrence, the co-op operates elevators in Lancaster, Atchison, Meriden and Scranton, Rushville, Mo., and other locations.

But any uncashed sale checks written before Wednesday will remain frozen, Dumler said, because the co-op cannot use any of the money it received prior to that date. The co-op must sell grain and other products to get enough cash to pay for new loads of grain.

"We own 3.5 million bushels of grain in our facilities, and we're going to sell it and ship it out," Dumler said. "If a customer comes in and buys a fence post, that's (also) cash we can use."

CoBank, the co-op's primary secured lender, agreed Friday to the arrangement approved by Flannagan. The co-op had defaulted on its CoBank line of credit in recent weeks, and was forced to stop buying grain Tuesday.

The "collateral-ash" arrangement will remain in effect for 30 days, Dumler said.

Meanwhile, the co-op's Overland Park attorneys will be refining a reorganization plan.

The next bankruptcy hearing is set for Thursday in Kansas City, Kan., and Dumler said it could be some time before a resolution is found for the frozen assets and debts.

He declined to discuss details of the pending reorganization plan, but suggested that some of the co-op's 19 locations or 140 employees could be eliminated to streamline operations.

"The customer, we're very sympathetic for him," Dumler said. "He's the owner of this business. That's the tough part. The board members and myself, we're the stewards.

"We're going to sit down and dissect this co-op inside and out. It won't be business as usual."

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